Ester Industries and Loop Industries Forge Joint Venture

On May 1, 2024, Ester Industries Limited informed the stock exchanges that it had entered into a joint venture agreement with Loop Industries Inc. The agreement was to incorporate a joint venture company in India to manufacture Dimethyl Terephthalate (DMT) and/or Mono Ethylene Glycol (MEG) by depolymerising Polyethylene Terephthalate (PET) and/or Polyester waste utilising patented Loop technology.

The company stated that both Ester Industries Limited and Loop Industries Inc will hold 50% in the proposed joint venture company with proportionate shareholder rights to voting, dividend distribution and other economic rights as per the joint venture agreement.

Significant terms stated in the joint venture agreement are that the entire project cost is anticipated to be approximately USD 165 million, and the same will be funded through an appropriate mix of debt and equity, which shall be invested from time to time. The joint venture company’s board will have 6 Directors, 3 from each company. The Chairman of the joint venture company will be appointed on a rotational basis for a period of 2 years, and the first Chairman will be appointed by Ester Industries.

The company also stated that the joint venture company would not take action with respect to any of the Reserved Matters as set out in the JV agreement without the consent of Ester Industries and Loop Industries Inc. This includes increasing the joint venture company’s share capital. The lock-in period for both shareholders will be 5 years from the commencement of commercial production.

The initial authorised share capital of the joint venture company will be ₹10,00,00,000, divided into 1,00,00,000 Equity Shares. At the time of incorporation, the JVC’s initial issued, subscribed, and paid-up share capital will be ₹20,00,000, comprising 2,00,000 Equity Shares with a face value of ₹10 each, all held by Ester Industries and its nominee(s). However, this ownership structure will change once Loop Industries Inc. becomes a shareholder in the JVC. Following Loop’s investment, subject to certain conditions precedent, both Loop Industries Inc. and Ester Industries will hold 10,00,000 Equity Shares each in the JVC.

About Ester Industries Ltd

Ester Industries is involved in the manufacturing of specialty polymers, engineering plastic compounds and polyester films.

On May 2, 2024, the share price of Ester Industries Ltd opened at ₹119.90, touching the day’s high at ₹123.85, as of 9:40 AM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.